UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF PENNSYLVANIA

UNITED STATES OF AMERICA, Plaintiff,

v.

FRANKLIN ACCEPTANCE CORP., a Delaware corporation, Defendant.

Civil No.

COMPLAINT FOR CIVIL PENALTIES INJUNCTIVE AND OTHER RELIEF

Plaintiff, the United States of America, acting upon notification and authorization to the Attorney General by the Federal Trade Commission ("Commission"), for its complaint alleges that:

1. Plaintiff brings this action under Sections 5(a)(1), 5(m)(1)(A), 9, 13(b), and 16(a) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 45(a)(1), 45(m)(1)(A), 49, 53(b), and 56(a), as amended, and under the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. §§ 1691-1691(f), as amended, and under the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 1681-1681t, as amended, to obtain monetary civil penalties for defendants' violations of the ECOA and Federal Reserve Board Regulation B, 12 C.F.R. § 202 ("Regulation B"), and injunctive and other relief.

JURISDICTION AND VENUE

2. This court has jurisdiction over this action under 28 U.S.C. §§ 1331, 1337(a), 1345, and 1355 and under 15 U.S.C. §§ 45(a)(1), 45(m)(1)(A), 49, 53(b), 56(a) and 1691c.

3. Venue in the Eastern District of Pennsylvania is proper under 15 U.S.C. § 53(b) and under 28 U.S.C. §§ 1391(c), and 1395(a).

DEFINITIONS

4. As used in this Complaint:

a. the Equal Credit Opportunity Act or the ECOA refers to 15 U.S.C. §§ 1691-1691f, as amended;

b. "Regulation B" refers to the Federal Reserve Board Regulation B, 12 C.F.R. § 202, as amended;

c. the terms "adverse action," "applicant," "application," "credit," "consumer credit," and "creditor" are defined as provided in Regulation B, 12 C.F.R. § 202.2;

d. the Fair Credit Reporting Act or FCRA refers to 15 U.S.C. §§ 1681-1681t, as amended; and

e. the terms "consumer," "consumer report," and "consumer reporting agency" are defined as provided in Sections 603(c), (d), and (f) respectively of the FCRA, 15 U.S.C. §§ 1681a(c), (d), and (f).  

DEFENDANT

5. Defendant Franklin Acceptance Corporation is a Delaware corporation, with its office and principal place of business located at One International Plaza, Philadelphia, PA 19113. The company transacts business in Maryland and Pennsylvania and has transacted business in Virginia, New Jersey, New York, and Florida. Franklin Acceptance Corporation is a finance company engaged primarily in purchasing automobile installment sales contracts from automobile dealers.

6. At all times material herein, defendant has been a "creditor" as that term is defined by Section 702(e) of the ECOA, 15 U.S.C. § 1691a(e), subject to the requirements of the ECOA and Regulation B.

DEFENDANT'S COURSE OF BUSINESS

7. At all times material herein, defendant has maintained a course of trade in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44, by providing vehicle financing to, and purchasing retail installment sales contracts from, automobile dealers.

VIOLATIONS OF THE ECOA AND REGULATION B

FIRST COUNT

8. On numerous occasions, defendant has discriminated against an applicant because all or part of the applicant's income derives from a public assistance program by discounting or excluding from consideration the income of an applicant who received payments of public assistance, thereby violating Section 701(a) of the ECOA, 15 U.S.C. § 1691(a) and Section 202.6(b)(5) of Regulation B, 12 C.F.R. § 202.6(b)(5).

SECOND COUNT

9. On numerous occasions, defendant has discriminated on the basis of sex and marital status by discounting or excluding from consideration the income of an applicant who received payments of child support, thereby violating Section 701(a) of the ECOA, 15 U.S.C. § 1691(a) and Section 202.6(b)(5) of Regulation B, 12 C.F.R. § 202.6(b)(5).

THIRD COUNT

10. On numerous occasions, defendant has discriminated against an applicant by discounting or excluding from consideration the income of an applicant on the basis of marital status, including failing to aggregate the income of unmarried co-applicants while aggregating the income of married co-applicants, thereby violating Section 701(a) of the ECOA, 15 U.S.C. § 1691(a) and Section 202.4 and 202.6(b)(5) of Regulation B, 12 C.F.R. §§ 202.4 and 202.6(b)(5).

FOURTH COUNT

11. On numerous occasions, defendant has discriminated against an applicant on the basis of marital status by requiring a married applicant to have his or her spouse and not any other person co-sign a loan where a co-signer was required, thereby violating Section 701(a) of the ECOA, 15 U.S.C. § 1691(a) and Section 202.7(d)(5) of Regulation B, 12 C.F.R. § 202.7(d)(5).

FIFTH COUNT

12. On numerous occasions, when defendant has taken adverse action on an application, defendant has:

a. failed to provide the applicant with written notification of the action taken, and

b. failed to provide the applicant with the specific, principal reason(s) for adverse action or to disclose the applicant's right to a written statement of the reasons for the adverse action,

thereby violating Section 701(d) of the ECOA, 15 U.S.C. § 1691(d), and Sections 202.9(a) and (b) of Regulation B, 12 C.F.R. §§ 202.9(a) and (b).

SIXTH COUNT

13. In the event defendant has provided the applicant with notification of adverse action taken on an application submitted directly or through a third party, defendant has failed to retain copies of such notification, thereby violating Section 202.12(b) of Regulation B, 12 C.F.R. § 202.12(b).

14. Pursuant to Section 704(c) of the ECOA, 15 U.S.C. § 1691c(c), defendant's violations of the ECOA are deemed to be violations of the FTC Act and are enforceable as such by plaintiff under that Act.

VIOLATIONS OF THE FAIR CREDIT REPORTING ACT

SEVENTH COUNT

15. On numerous occasions, when a consumer has been denied credit, either in whole or in part because of information contained in a consumer report from a consumer reporting agency, defendant has failed to either directly or indirectly:

a. advise the consumer that the adverse action was based in whole or in part on information contained in a consumer report; and

b. supply the consumer with the name and address of the consumer reporting agency making said report,

thereby violating Section 615(a) of the FCRA, 15 U.S.C. § 1681m(a).

16. Pursuant to Section 621 of the FCRA, 15 U.S.C. § 1681s, defendant's violations of the FCRA constitute unfair or deceptive acts or practices in commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).

CIVIL PENALTIES AND INJUNCTION

17. Defendant has violated the ECOA and Regulation B, as described above, with knowledge as set forth in Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. § 45(m)(1)(A).

18. Each instance, during the five years preceding the filing of this complaint, in which defendant has violated the ECOA and Regulation B in one or more of the ways described above constitutes a separate violation for which plaintiff seeks monetary civil penalties.

19. Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. § 45(m)(1)(a) authorizes the Court to award monetary civil penalties of not more than $10,000 for each such violation of the ECOA and Regulation B that occurs prior to November 20, 1996. Section 4 of the Federal Civil Penalties Inflation Adjustment Act of 1990, 28 U.S.C. § 2461, as amended, authorizes the Court to award monetary civil penalties of not more than $11,000 for each such violation of the ECOA and Regulation B that occurs on or after November 20, 1996.

20. Under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), this Court is authorized to issue a permanent injunction prohibiting defendant from violating the FCRA, the ECOA and Regulation B, as well as ancillary equitable relief.

PRAYER FOR RELIEF

WHEREFORE, plaintiff requests that this Court, pursuant to 15 U.S.C. §§ 45(a), 45(m)(1)(A), 49, and 53(b), and pursuant to this Court's own equity powers:

1. Enter judgment against defendant and in favor of plaintiff for each violation alleged in this complaint;

2. Award plaintiff monetary civil penalties for each violation of the ECOA and Regulation B as alleged in this Complaint;

3. Enjoin defendant from violating the ECOA, Regulation B, and the FCRA;

4. Award such other relief as may be just and proper.

DATED: